Employee retention is a big deal for small businesses because people who stay tend to contribute to organizational growth. Moreover, retaining employees is more challenging than hiring them, making it critical for small companies with limited resources. Not surprisingly, 93% of business owners stress about retention rates.
According to the Bureau of Labor Statistics, employee turnover in the US averages 4.1 years. That’s not an encouraging number for companies spending thousands to hire and train people. When you invest in employees, you expect them to stay forever. Unfortunately, the employee attrition rate in 2021 was a staggering 47.2%.
As a small business owner, you should try your best to avoid being a part of these statistics. Optimal compensation, a healthy work-life balance, and a positive company culture are a few evident moves to win the retention game. But you can think outside the box and use retirement planning to make people stick.
Here are a few ways attractive retirement benefits can help your company’s retention rates:
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Provide Financial Security
Statistics show that Americans over 65 spent $52,141 on average in 2021. Housing was the largest monthly expense, while food was a close second. Additionally, 27% of retirees reported spending more than what they can comfortably afford. Considering these numbers, financial security emerges as a key concern for the workforce.
As an employer, you can help them overcome financial anxiety by offering coverage with solutions like 401(k) retirement plans. Such coverage gives people a sense of security and stability for their future. When people feel secure in their current job, they hardly have a reason to look for better employment prospects.
TriNet notes that small businesses shouldn’t have any qualms regarding the upfront investment and administrative fees for a 401(k) retirement plan. While the expense may seem painful, it is an excellent way to retain people. Moreover, you can explore options to find an affordable plan that doesn’t pinch your limited budget.
Show a Long-Term Commitment
Retirement benefits replicate a long-term commitment toward the financial welfare and security of your workforce. They are like a promise to help them save enough money for comfortable golden years. With one in four Americans having no or low retirement savings, knowing that their employer is doing their bit helps.
Contributing to employees’ savings and creating a path for their long-term security makes people feel valued and supported. They are likely to reciprocate your commitment by staying with your business for the long haul.
Enhance Employee Engagement and Satisfaction
Access to retirement benefits creates more than a future financial security net for the workforce. It enhances their engagement and satisfaction levels, often translating into better performance and productivity. Engagement is also a key driver of retention for organizations as it fosters a positive work environment.
According to Zippia, workers with high engagement levels are 87% less likely to voluntarily leave and move to another job. Spending on retirement benefits is a wise move, considering the number of ways it can boost the bottom line of your small business.
Provide a Competitive Advantage
The US Bureau of Labor Statistics states that more than 4.3 million Americans voluntarily left their jobs in December 2021. The rise of the gig economy in the country is another factor contributing to talent shortage across all industries. The talent race becomes more challenging than ever for small businesses that cannot offer far packages to attract employees.
Robust retirement benefits can give your small business a competitive advantage in these circumstances. Job seekers often consider them as a significant part of the compensation package. They also feel emotionally vested in companies going the extra mile to ensure long-term financial security for their workforce.
Secure Tax Incentives
Besides boosting employee retention for your small business, retirement benefits can help you make hefty savings on taxes. They actually provide tax advantages for employers and employees. For example, the 401(k) retirement plan is tax-deferred, implying that taxes are to be paid only after withdrawing funds from the plan.
Since employer contributions are tax-deductible, small businesses can get significant cuts in their tax burden. Employees get the benefit of tax-deferred growth on their long-term savings, adding appeal to their compensation package.
Conclusion
Retirement benefits are the best gift you can give to your employees as they translate into a secure and comfortable future. Doing your bit by contributing to employee retirement savings earns your small business the trust and loyalty it deserves.
Top talent is keen to join your workforce and stick around for the long haul. The best part is that you get significant tax benefits by contributing to an employee retirement plan. There couldn’t be a better way to master the retention game.
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